LAO lauds governor's budget proposal

Wednesday

Jan 16, 2013 at 12:30 PMJan 16, 2013 at 2:27 PM

Responding to Gov. Jerry Brown's proposed 2013-14 fiscal budget, California's Legislative Analyst's Office released its overview on the budget at a press conference Monday, calling it sound and “commendable.”Analyst Mac Taylor said the plan presented in Gov. Brown's proposal was on par with being a balanced approach to what the state needed.

By Jack Barnwelljbarnwell@ridgecrestca.com

In November when the LAO released its 2013-14 budget outlook projecting a $1.9 billion deficit — a large improvement over massive deficits in the past — the state's outlook would depend on fiscal restraint."We think the governor's budget reflects that kind of fiscal discipline," Taylor said.When Gov. Brown released his proposed budget last Thursday, he touted an end to the state's operating budget deficit, though it was dependent on whether all his proposals passed muster with the state legislature.The budget plan included a $1 billion surplus at the end of the 2013-14 fiscal year, the result of years of bone-deep cuts and bolstered by tax revenue garnered from the passage of Proposition 30.The $97.7 billion operating budget promised an increase in spending for both university systems, huge gains for the K-12 and community college budgets and approaches to handling the federal expansion of Medicare.Brown’s proposed budget promises the K-12 and community colleges $56.2 billion, a $2.7 billion increase over last year. The University of California and California State University systems both stand to gain $125 million more each, on top of the $125 million for each system expected from Prop. 30.Taylor commended the budget, saying that it pays down debt, including $2 billion in delayed payments to schools, and that the budget stressed that additional payments were plugged in down the road to get the obligations “off the books.”“This is really critical because we still face a lot of risk,” Taylor said.While Taylor said the LAO respected Brown’s sound judgment in the plan, he was critical of some aspects, including the fact that it did not pay down the state’s “wall of debt” within the budget’s period of time.“It builds up very little reserves in that time period and it does nothing regarding our various retirement obligations,” Taylor said. He did note that the governor’s budget referenced those problems.The major difference was about $1.1 billion in revenue between what Gov. Brown’s plan projected and what the LAO forecast in its November report.The numbers largely depend on whether the tax revenues were up to par come May, and it was still very possible to see major shifts in the numbers in Brown’s proposed expenditures.Another factor was one largely recognized as beyond the state’s control — the federal debt ceiling and the federal government’s handling of that situation. If not resolved, Taylor noted its adverse reaction on the national economy would be felt in California.Overall, however, the differences between the LAO and the administration were so negligible that it would do no good to quibble over small details.Brown’s approach to K-12 and community college funding was commended.“We think the governor is on the right track for the funding formula for K-12 schools,” Taylor said.The governor’s proposed plan included categorical spending, departing from the norm of limiting schools to spending money on specific needs from earmarked pots of money by designating spending on schools with more need.All systems would receive the standard amount but would be augmented based whether a district needed more to help with low-income families or communities.However, Taylor said the LAO questioned some funding practices, especially with how the governor shifted money from Prop. 39 — half of which is promised to go toward energy projects — toward Prop. 98 calculations. Prop. 39 promises $550 million per year until it expires in 2019.Prop. 98, passed in 1988, mandates at least a minimum set of California’s budget be spent on public K-12 education. Taylor said that was a major departure from how the LAO traditionally understood the use of tax revenue and its legality may be questionable under the state constitution.“This is a serious departure from our longstanding view of how revenues are to be treated for the purposes of Proposition 98,” the LAO wrote in its overview. “It also is directly contrary to what the voters were told in the official voter guide as to how the revenues would be treated.”Taylor also commended the approach to handling higher education but at the same time questioned some promises Brown would make. Brown’s budget expects the UC and CSU systems to suspend tuition increases for the next four years but at the same time promises a 5 percent increase in intervening years.